A massive restaurant is now exiting out of its bankruptcy as it confirms the purchase of its new partners, sources report.
Red Lobster’s path out of bankruptcy has been revealed after the chain announced its new owners.
On Monday, the bankrupt seafood restaurant confirmed that RL Purchaser LLC, a new group by Fortress Credit Corporation, will take over after no other bidders came forward.
RL Purchaser was what is known as a “stalking horse bidder,” which is a company that makes an initial bid for the assets of a bankrupt company and sets the price for the start of the auction.
When Red Lobster filed for bankruptcy two months ago, it scheduled an auction for July 23.
However, this was canceled after no bidders came forward in time for the chain’s deadline of July 18, making the stalking horse bidder the automatic owner.
The lack of interest could be down to Red Lobster’s announcement at a hearing in July that a traditional asset sale would not take place.
“The idea is to … maintain operational continuity and potentially reduce the costs and complexities associated with a traditional asset sale,” attorney Jeffrey Dutson of King & Spalding LLP, who is representing Red Lobster, said at the hearing, according to the Orlando Business Journal.
RL Purchaser paid out a big $376 million for the chain’s assets, according to the news outlet.
The new entity already has a history of buying bankrupt companies as it already purchased Vice Media and Alamo Drafthouse.
The asset sale will be reviewed at an approval hearing on July 29, according to federal court documents seen by USA Today.
Ahead of the approval hearing next week, Red Lobster CEO Jonathan Tibus has revealed how the sale of the seafood chain will see widespread changes.
Under new ownership, the chain will be able to restructure and improve operations.
The key issues to address will be those highlighted in the bankruptcy filing as major contributors to Red Lobster’s financial failings.
Red Lobster shuttered a slew of restaurants as it filed for Chapter 11 protection, citing billions of dollars of debts and “a bloated and underperforming restaurant footprint.”
The poor economic environment and increased competition were blamed for its recent financial failures as well as the all-you-can-eat-shrimp deal for just $20.
According to financial reports from the third fiscal quarter of last year, the chain lost $11 million in that quarter purely due to that one deal designed to increase foot traffic.
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Also Read: Another Mall Clothing Retailer Now At High Risk of Bankruptcy
Other Economy News Today
A massive rental company with 34k locations now shuts down its operations after filing for bankruptcy and 22 years in business.
Users of movie rental company Redbox were left saddened after it was announced that it would be shutting down operations.
The announcement comes after the rental company’s parent company, Chicken Soup for the Soul Entertainment, filed for Chapter 11 bankruptcy.
According to court documents obtained by the Washington Post, the Connecticut-based company claimed to be one billion dollars in debt.
As a result, Redbox, which was a staple of many grocery stores including Walgreens, and CVS will be shuttered.
Many fans took to social media to express how upset they were with the loss.
“I knew it was coming, sadly,” UltraVada wrote in a post on X, formerly Twitter.
“It was inevitable,” a second person mourned.
“I knew this would happen when I heard they filed for Bankruptcy but its still sad to hear. I have a lot of fun memories of Redbox,” a third person lamented.
“I still don’t think this will be or ever be the end of physical media as we do still get remasters of some movies in 4k/Bluray.”
One person revealed that they had forgotten the rental service had existed.
Some users were not surprised by the announcement.
“Not surprised since nobody really rents videos anymore with the rise of streaming and what not,” one user admitted.
“Also kinda remember getting into a feud with them on here.”
One user also pointed out that the last remaining Blockbuster, located in Bend, Oregon, managed to outlive Redbox.
Redbox was acquired by Chicken Soup for the Soul Entertainment (CSSE) in 2022 and became one of the company’s flagship video-on-demand streaming services.
At its peak, CSSE operated more than 20,000 DVD rental kiosks across the country.
The company’s filing means that the company’s more than 1,000 employees will be laid off, per The Wall Street Journal.
It was also reported by Deadline that many employees at CSSE hadn’t received their paychecks and had medical benefits cut in late June.
Also Read: This Massive Mall Retailer Is Now Closing In California
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